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Divorce and family law explained

A pre nup - insurance for married couples?

When you enter into a long term relationship or marriage the last thing you probably want to think about is what happens if that relationship breaks down. In the same way I suppose none of us wants to take out health or car insurance because we think we are going to have an accident or suffer ill health. The difference is that we do take out these insurance policies – everyone driving a car has to be covered by insurance and with worries about care from the NHS increasing numbers are taking out private health insurance too. The same can’t be said at the moment for prenuptial agreements which are, after all a form of insurance for married couples.

Why is that I wonder? Our suspicion is that driving a car or looking after your health is not a romantic endeavour, whereas marriage is, at least in most people’s eyes.

Why you need a prenuptial agreement

To understand why a pre-nup is important you need to know that once you are married your assets are assumed to be joint. That means that if you split, notionally at least your assets will be split too.

If we take the ‘insurance’ argument to its logical conclusion some might say that everyone should have a pre-nup. In our experience they are certainly becoming more common. There are some particular circumstances however when a prenuptial agreement might be a really good idea, or some might say essential – for example when:

One partner is much wealthier than the other

One partner is much older (and wealthier) than the other

Marriage takes place after a very short ‘engagement’, ie before the partners have really got to know each other

The parties are bringing property or significant assets into the marriage

One or both of the parties have children from previous relationships or marriages and want to protect their wealth for the benefit of those children

What you need to know about pre-nups

Prenuptial agreements are not absolutely binding on a divorce court, however recent case law has determined that where they have been properly set up they carry very significant weight, provided both parties knew each other’s financial assets and could then understand the effect of the agreement and what they were each agreeing not to claim from the other if the marriage doesn’t work out. Each parties circumstances at the time of the agreement will also be relevant, including age and maturity, whether previously married or in long term relationships before, and so on.

The pre-nuptial agreement must show that:

it can be enforced under the General Law of Contract with no obligations on any third party who had not agreed in advance to the terms of the agreement

both parties received independent legal advice before entering into the agreement

both parties had full appreciation of the implications of agreement

both parties provided full disclosure of assets and property before the agreement was made

both parties entered into the agreement of their own free will without undue influence or pressure.

both parties intend for the agreement to be effective when entering into it.

It is essential therefore both parties appreciate what would be a fair division now as well as in the future, of capital, income and any pensions provisions, considering, for example, whether they have or are likely to have children, as a prenuptial agreement will not be held as fair if tested at Court if it does not meet the parties’ and any childrens’ needs.

Whilst the courts are respecting more and more the autonomy of parties in making agreements prior to or during the marriage to deal with finances on separation, ultimately if at the time of separation one of the parties seeks to suggest that the agreement should not be enforced, the court will have to make an appropriate decision, considering all of the relevant circumstances on a case by case basis.

Agreements after marriage

Post-nuptial agreements are advisable for couples already married and those making pre-nuptial agreements, making their pre-nuptial agreement ‘watertight’ by reaffirming once married that you still intend to be bound by its terms. It is also advisable that a review is included in the agreement, for example if circumstances change (the birth of any child / sale of the company / redundancy / inheritance). Case law suggests that regularly reviewed agreements are more likely to be upheld. A simple post-nuptial Codicil could confirm the parties remain in agreement over the terms of their pre-nuptial agreement possibly also referring to any Wills, living-wills and Powers of Attorney which you have had prepared.

Beware your marriage vows

Saying “I Do” might go against your prenuptial agreement if you will be uttering the traditional English church wedding vow which includes “with all my worldly goods I thee endow”. Don’t worry – you don’t have to change your vows, if these are the ones you have chosen, but certainly a postnuptial confirmation would show you intended the terms of your pre-nuptial agreement and not this part of your marriage vow.

It is surely then the decision of each couple whether they would wish to have an agreement at the beginning before they make the commitment to marry to be able to protect their respective interests and what they financially bring into the marriage should the marriage not last. A prenuptial agreement is a sensible insurance option, we think.